In order to manage procuring supplies and services a purchasing professional will utilize certain forms and the three (3) forms most commonly used are the Request for Proposal (RFP); Request for Quotation (RFQ); and the Invitation to Bid (ITB) and there are many others.
- Request for Proposal (RFP) – The RFP is now the most common or go to form for procurement or purchasing personnel. It is often used to buy straightforward spend, which in our opinion is overkill and potentially problematic. Whaaat! Hold on, RFP’s do have their place and in many instances they are the best document for the job. RFP’s can be used in many situations — for example when looking for an expert to provide a solution to a need which may differ from proposal to proposal; when you have a detailed scope of work for equipment and labor; and there are many others. Just remember, a RFP is subject to interpretation so ensure it is very clear on the need. Never write an RFP if it is your first time as this is when mistakes will become prevalent AND never start with a blank piece of paper — source templates or examples or models to help you with the initial development.
- Request for Quotation (RFQ) – Some would argue that the RFQ is no longer relevant or is no longer the form of choice as it has been replaced by the Request for Proposal (RFP) form. The RFQ form is a better option or should be used when a Buyer is looking to purchase a commodity with little desire or ability to accept an alternative. For example, there is a description, a part #, unit of measure and a specific quantity needed. It is a straightforward buy. We need 10 xyz widgets and please quote me price and delivery on these 10 xyz widgets.
- Invitation to Bid (ITB) – The ITB is also one of the many procurement forms in circulation today. It is similar to a RFQ in that it is an invite from a Buyer to a potential Supplier to offer a product or service for a cost. The ITB is a more formal document and along with the bid document there will be a set of conditions. If you accept the bid or offer from the Supplier the conditions form part of the acceptance.
While most of these procurement forms are relatively straightforward, the Request for Proposal is a form that has continued to evolve since its first started to appear in the early ’80’s. RFP’s have become more prevalent and continue to be refined. Regardless, companies that purchase goods and services need procurement forms to help manage their business. These forms are used when your selection criteria might include factors other than price, like service capabilities or technical support.
Role players in an RFP / RFQ
Along with the types of forms used in purchasing, we thought it might be beneficial to define or explain the players: Typically there are 3 or 4 role players in the RFP or RFQ process:
- tenderer aka Supplier / Offeror / Vendor / Bidder who is a seller of materials and or supplies which may submit a proposal or quotation on your requirements identified in the request for proposal;
- then there is the Owner / Buyer which pays the invoice submitted by the Supplier — next the User / Internal Department which developed the scope of work or department that originally made the request;
- and last, the Purchasing Agent / Procurement Officer who owns the process or is managing the RFP / RFQ. There are others, however, they are not relevant to this discussion.
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